Q & A with Paul Krugman
Interview by Lynn Adams Smith
Nobel Prize-winning economist Paul Krugman is the Distinguished Professor of Economics at the Graduate Center of the City University of New York and professor emeritus of Princeton University. He received his BA in economics from Yale University, where he was a National Merit Scholar, and earned a PhD in economics from MIT. Krugman is the author or editor of 27 books, including scholarly works, textbooks, and books for the general public. His most recent book, Arguing with Zombies: Economics, Politics, and the Fight for a Better Future, expands upon his New York Times opinion columns to highlight how some conservative lawmakers use false or misleading information to benefit the wealthiest Americans.
In your book, you describe zombies as “ideas” that have been proven wrong by evidence but refuse to die. The ideas keep shambling along, eating away at people’s brains, and are kept alive by influential people such as billionaires and politicians. What are a few examples of zombies?
The most persistent zombie in U.S. discourse — the Zombie Supreme, you might say — is the belief that cutting taxes on high-income individuals will create an economic miracle. It never works, yet the belief persists. Belief that government debt is terrible, horrible, that it means crisis any day now is another, and it persists even though the debt scaremongers have been wrong year after year. Yet another is the belief that we can’t address environmental problems without killing the economy, even though clean technologies have made huge progress.
How is a cockroach idea different from a zombie, and what is an example?
Cockroach ideas are ideas that can be made to go away for a while, but keep coming back. I think I introduced the term in response to people who kept saying that Keynes would never have advocated fiscal stimulus if debt had been this high in his day. When you point out that debt was actually very high in the 1930s, this claim tends to go away, but someone else who hasn’t checked the facts always shows up to make it again.
Who will benefit the most from Biden’s coronavirus relief package, and does it properly target the specific needs of the current crisis? Is $1.9 trillion the appropriate size to jump-start employment recovery? How does the relief package compare to Obama’s 2009 $831 billion stimulus plan?
This is a very redistributive plan: huge benefits for lower-income families, especially with children. It’s important to understand that it’s NOT mainly about jump-starting the economy; it’s about getting us through the rest of the pandemic. And I have to admit, it’s a generous plan — it provides mostly adequate aid to those in need, and does scatter the aid widely, so many people who might not need help get money as well — which is OK. This is all a huge contrast with Obama’s stimulus, which was supposed to drive recovery, and was woefully underpowered for the task.
The $15 minimum wage proposal did not make it into the relief package. What do history and data say about the correlation between increasing wages and job loss? Is it possible that increasing the current minimum from $7.25 to $15 is too big of a jump for small businesses trying to stay afloat during COVID?
Minimum wages are a subject where we have unusually good evidence, because many states set minimums above the federal level and we can see what happens when they raise wages. The answer, overwhelmingly, is low to zero job loss. To some extent that might be because minimum wages are so low — surely a minimum wage of, say, $30 would cost jobs. But we can be reasonably sure that not many jobs would be lost if we went up to $15.
As for small businesses, there’s a big difference between asking, “Could I afford to raise the wage I pay to $15?” and asking, “Could I afford to go to $15 if all my competitors have to do the same thing?” There really isn’t much reason to think this would be a huge problem.
What has caused wage stagnation in the middle class and what will it take to increase wages?
That’s actually a huge question. Economists used to think that it was mainly about technology reducing the demand for less-educated workers. But these days many of us place a lot of weight on loss of bargaining power, and the decline of unions in particular. If we want to raise wages, revitalizing the labor movement will be crucial.
Trump’s attempt at killing Obamacare by eliminating the individual mandate failed, but it was successful in reducing enrollment and increasing premiums. A single payer system would be less expensive but Medicare for all does not have wide-reaching support. Is there a way to achieve universal health care without going to Medicare for all?
Definitely. Every other advanced country has universal care, achieved in multiple ways. Direct provision of health care, as in Britain, is the cheapest, single-payer, as in Canada, next, but decentralized systems with regulation and subsidies work in places like Switzerland and the Netherlands. A reinforced version of Obamacare would be complicated and still have some holes, but it can get us most of the way there.
Why do farmers and blue-collar workers continue to support Trump despite being hurt by his policies?
Race, above all. Nothing in American politics makes sense without factoring in white fear of people who look different. Cultural issues also play some role — many people don’t like the secularized, pluralistic society we’ve become. But maybe we should admit that it goes both ways: there are a lot of affluent people in New Jersey who vote for politicians who raise their taxes, because they’re appalled by the culture of the modern right.
What will it take for the Republican Party to cut ties with Trump, or will that never happen?
What do I know? I am not a political scientist, although I talk to people who are. But the important point, surely, is that whatever happens to Trump, Trumpism — deep illiberalism, contempt for democratic values — is what today’s GOP is all about. They’re never going back to what they were.
Does New York City need to reinvent itself after COVID? What changes has the city made or should it consider making to help the economy diversify and rebound?
We don’t really know yet. There will surely be a lot more working from home, which is bad for commercial real estate, but it’s not clear how many people and businesses will actually move away from New York on a sustained basis. The city remains a powerful draw; I liked the quote from one money manager who said, “The problem with moving to Florida is that you have to live in Florida.”
Are Amazon, Facebook, Google, and Apple monopolies? Does their economic dominance present a problem, or are they modern day examples of the American dream?
Yes, they’re monopolies. And they create a lot of problems, ranging from excessive market power to outrageous tax avoidance. For now, however, we should focus on correcting those problems rather than making it mainly a war on particular companies.
Approximately how many people click onto one of your New York Times columns? Given each print copy is read by more than one person in a household, what is your best guess estimate of your total combined readership in print and online, over the course of the 20 years you’ve been writing the column?
I actually don’t know how many people read a column. I do know that I have 4.6 million Twitter followers, so it’s a good bet that millions of people read each column. Certainly a lot more people than have ever read my academic papers!
Such a huge readership must also generate a fair number of angry op-eds and hostile emails. How do you personally deal with the attacks?
I use filters to screen out a lot of the hate mail, and quickly bypass what gets through. In general, you have to develop a thick skin to be an opinion writer. If what you write doesn’t upset many people, you probably aren’t doing the job, which isn’t about making people comfortable. Actually, what’s kind of funny is that the biggest eruptions of hate often come when I write about economics — nothing induces rage as much as a column suggesting that debt isn’t a huge threat or printing money doesn’t always cause inflation.
I learned from watching your 92nd Street Y interview that you discovered indie rock in your 50s. Share with us how that came about and do you have a favorite band?
When Arcade Fire won a Grammy, for some reason I decided to listen to their stuff, and was shocked at how good it was. From there I branched out to many less famous bands, especially ones I can see live in small venues. I don’t have a single favorite these days, partly because I keep discovering new music. Right now, for example, I’m listening a lot to Larkin Poe, sisters from Atlanta, and Hayde Bluegrass Orchestra, a bluegrass band from Oslo, Norway.
Looking forward, what are you most concerned about and what makes you feel optimistic?
I’m terrified that democracy will collapse — we barely made it through 2020, and the threat isn’t over. Beyond that, climate change is an existential threat.
I have, on the other hand, been amazed at humanity’s continuing ability to innovate — progress in green energy has been amazing, and vaccine development has been a miracle. And I’m still kind of giddy at having a U.S. government that actually pays attention to facts.